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PepsiCo(NYSE:PEP) enjoyed solid operating momentum through the early days of the COVID-19 pandemic but has now entered a risky time for the business.

Those were the big takeaways from the drink and snacks giant's recent first-quarter earnings report, which also included optimism from the management team regarding its cash return plans.

Let's dive right in.

Volume spike

Pepsi achieved a 9% increase in organic sales revenue that more than doubled the expansion pace it notched over the past year. That boost put the company well ahead of rival Coca-Cola(NYSE:KO), which recently announced flat organic sales.

Pepsi enjoyed a sharp demand increase across its Frito-Lay, Quaker Foods, and soda franchises, including a 6% uptick in U.S. beverage sales.

Image source: Getty Images.

That growth comes with a big caution sign, though. Pepsi's quarter runs through March 21, whereas Coke's ended on March 27. That means the latter had an extra week of maximum social distancing reflected in its report that Pepsi did not.

Lockdown efforts started around March 12 in major economies like the U.S., and so Pepsi's organic sales benefited from stock-up behavior without reflecting the volume decline that likely followed. For context, Coke noted plummeting demand in early April as consumer drinking occasions dropped.

Making moves

Pepsi made a few big moves aimed at shoring up its long-term growth profile in recent weeks. Its acquisition of Rockstar Energy has closed, management said, and executives also struck a deal with Bang Energy to become the exclusive distributor of those beverages in the U.S. market.

These franchises join Mountain Dew and AMP to bulk up Pepsi's offerings in the attractive energy drink category. They might help close the broader market share gap with Coca-Cola, given that Pepsi expanded its beverage volume by 3% last year, or about half of the market leader's growth pace.

Cash and outlook

CEO Ramon Laguarta and his team withdrew Pepsi's 2020 outlook, citing the uncertainty around the path of the virus and the timing and scope of the economic rebound that should arrive after the threat passes. Pepsi is likely seeing a drop in on-the-go drink and snack purchases, just as industry peers have reported in recent weeks. Coke said sales dropped 25% in the first few weeks of April and Hershey has revealed a 50% decline in demand for products like mints and gums.

Pepsi is in a good position to weather such volatility, according to management. "With a strong balance sheet, highly cash generative business and ample liquidity," Laguarta said in a press release, "we believe we have adequate flexibility to meet the needs of our business and return cash to shareholders."

Executives backed up those optimistic comments by affirming plans to send $7.5 billion to investors this year through a mix of dividend payments and $2 billion of stock repurchase spending. Investors should take that news as a positive sign about the strength of consumer giant's business, even if the next few quarters could show slumping sales in categories like convenience snacking and on-the-go beverage consumption.